Tuesday, 30 January 2018

January 2018 Update

January 2018 Update

January 30, 2018. Mike Temple

January has seen a firming in spot value of feed wheat;
£145-147/t (depending on location) is quite easily achievable. This is purely
down to buyer’s taking cover hand-to-mouth as there is very little carry
further forward in the market. The inflated spot feed market is also
highlighted by a disconnect between physical and futures markets; May’18 London
wheat futures are currently trading at £139/t. In the last couple of months the
futures market has dropped by around £10/t whereas the spot value for physical wheat
remains relatively stable and looks likely to remain that way for the next
month.

Oilseed Rape (OSR) has been the whipping-boy of the last
couple of months with spot-values currently around £293/t, a drop of over £30/t
from the highs seen in early November. It is difficult to say exactly what has
caused this drop-off with very few sellers at these recent levels; there has
been talk of imported Australian canola coupled with increased imports of
Argentine bio-diesel, but nothing certain. The pertinent point however is that
there is still at least another five months until there is any new crop OSR
available in the UK, and given the inherent volatility of the OSR market, you
would like to think there would an upside swing at some point.

Imported ammonium nitrate (AN) continues to offer good value
against UK, with at least a £10/t differential between the two. It would be
hoped that with the recent strengthening of the pound imported AN and compound
will remain competitive.